FWC bombshell ruling on overseas-based workers a win for the recruitment industry

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The whole premise of outsourcing work to overseas workers to save on Australian wages and salaries has been thrown into doubt with a recent ruling by the Fair Work Commission (FWC).

An outsourced worker in the Philippines has won her case against an Australian business in the FWC, after her former employer recently lost an appeal to the Full Bench of the FWC.

According to a legal filing for Joanna Pascua in the FWC, who was sacked last year by a Brisbane-based credit reporting law firm, Doessel Group, she was likely among “tens of thousands” of people hired by Australian companies as “offshore contractors” when many of them were in fact employees left without protections either in Australia or their home countries.

The Commission heard Pascua’s contract with Doessel Group required her to investigate credit claims and liaise with Australian banks and credit agencies on behalf of clients of a related business, My CRA Lawyers.

In February 2024, Pascua’s contract was terminated after the firm accused her of unlawfully copying company and client information to her personal drive — allegations she denied.

Doessel Group argued she was an “independent contractor” outside Australia’s jurisdiction however last September, Fair Work Commission Deputy President Tony Slevin found that this “belied that actual nature of the contract (and) Ms Pascua was not conducting her own business”.

He ruled that Pascua was an employee of an Australian company, and entitled to national minimum work standards, which include a wage of at least $24.87 an hour even though Pascua had signed an independent contractor agreement at a flat hourly rate equivalent to AUD $18.

Key pieces of evidence presented to the FWC in persuading them that Ms. Pascua was an employee, not a contractor, included

Her fixed weekly hours (8.30 am – 5 pm AEST, Monday to Friday),
Her hourly rate payment, rather than being paid on milestones or outcomes,
Those hours being exclusively provided to Doessel Group,
Her inability to delegate or subcontract her work,
Her use of the firm’s internal systems (including having an email address with the firm’s domain name),
Her attendance at regular Zoom meetings, and
The way she was represented to others as being part of the firm’s legal team.

The upholding of the appeal by the full bench of the commission in February has cleared the way for Pascua to continue her unfair dismissal claim, and to pursue unpaid wages through the Fair Work Ombudsman.

Sprintlaw’s Sapna Goundan, in an opinion piece yesterday, said

The Commission confirmed that the Fair Work Act can apply extraterritorially in certain circumstances, including where:

The worker is employed by an Australian company (a “constitutional corporation”);
The relationship is governed by Australian law – or not clearly governed by foreign law;
The work is performed for the benefit of the Australian business.

This means that even if a worker is physically based overseas – and not an Australian resident – they may still be entitled to protections under the Fair Work Act.

Manila-based Chris Moriarty, the Australian founder and CEO of staffing outsourcing company Flat Planet, welcomed the decision.

In a recent blog on his company’s website Moriarty said

Pascua v Doessel helps close the door on what is effectively a black market. Currently, an unknown number of Australian (and other) firms hire Filipinos directly and pay via wire transfer, avoiding a bunch of “costs” but also regulations.

The Fair Work Commission decision significantly disincentivises the black market option for Australian businesses. Not only are such employees now able to appeal for protection around an issue like unfair dismissal, but also potentially around minimum wage.

Australian businesses should engage with the South East Asian workforce. It is great for business, great for cultural exchange and great fun also. But, when we operate in South East Asia we need to remember the values that make us who we are as Australians.

We need to engage lawfully and respectfully, we need to ensure our workforce has a sense of personal dignity in the workplace, we need to remember we are neighbours and we are all in this together.

Pascua v Doessel is a great decision that sets everybody up for a win. Joanna Pascua is a hero and should be applauded.

The ABC reported that,

Ms Pascua said her work “happily defending consumers” had shown her that “Australian law is very considerate on the actual circumstances of the consumer or the individual [and disputes] will get sorted out in a very fair way”.

Ms Pascua said remote jobs had meant new opportunities for working people in the Philippines, especially university-educated women who had raised their families and wanted to make a fresh contribution.

But after her sacking, she felt a need to show her adult children that she could “practise what I preached to them growing up”, including to her daughter, a law student who she hoped would one day become a judge.

This decision can only be good news for local recruitment agencies and staffing businesses who are unambiguously bound by Australian employment law.

The playing field with RPOs providing staffing services to Australian businesses, no matter where they are located, is back to even.

Compliance ignorance in recruitment: do you know what you’re really risking?

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Posted in Recruitment